This archive report was first published on 25 September 2019.
Kenyan lawmakers are standing firm in their commitment to protect consumers from high-interest rates, despite a High Court ruling that the Banking Amendment Act must be amended by March 2020.
The court's directive, issued in March 2019, requires Parliament to review the Banking (Amendment) Bill 2019 and make necessary changes to the interest rate cap. Failure to comply will result in the cap being repealed, leaving interest rates to be determined by market forces.
Proponents of the interest rate cap, including MP Jude Njomo, argue that the current system is designed to protect consumers from exploitation by commercial banks. They claim that the unavailability of credit in the market for small and medium-sized enterprises (SMEs) is a ploy by banks to pressure the government into repealing the law and allowing them to charge higher interest rates.
Njomo has rallied his fellow lawmakers to ensure that the Banking (Amendment) Bill 2019 is reviewed with the aim of preserving the interest rate cap. He has also accused commercial banks of being insincere when they sought to repeal the cap in 2018, leading to the removal of the floor cap on deposit rates.
Parliament has until March 2020 to make the necessary amendments to the Banking Amendment Act. If they fail to comply, the interest rate cap will be repealed, and interest rates will be determined by market forces.
